The following section describes the industry and business risks and opportunities of the Daimler Group. A quantification of these risks and opportunities is shown in table B.59.

B.59 Industry and business risks and opportunities

Risk category

Probability of occurrence

Impact

Opportunity category

Impact

General market risks

Medium

High

General market opportunities

High

Risks relating to leasing and sales financing

Low

Low

Opportunities relating to leasing and sales financing

Low

Procurement market risks

Low

High

Procurement market opportunities

Low

Risks relating to the legal and political framework

Medium

High

Opportunities relating to the legal and political framework

Low

Economic risks and opportunities

Economic risks and opportunities constitute the framework for the risks and opportunities listed in the following categories and are integrated as premises into the quantification of these risks and opportunities. Overall economic conditions have a significant influence on automobile sales markets. Their development is one of the Group’s major risks and opportunities.

Like the majority of economic research institutes, Daimler expects the world economy to remain within its rather below-average growth corridor of 2.5 to 3.0 % in 2016. Economic developments in 2015 are described in detail in the “Economic Conditions and Business Development” section of this Management Report; growth assumptions for 2016 are explained in the “Outlook” section Economic Conditions and Business Development and Outlook.

Economic risks and opportunities are linked with assumptions and forecasts on the general development of the individual subjects. Overall, economic risks for the business environment have tended to increase compared with the previous year, and the opportunities for an improvement of the world economy have slightly decreased.

The ongoing growth dynamism of the US economy will be mainly determined by reactions to the first increases in interest rates by the central bank after such a long phase of extremely low rates. Excessively fast increases in interest rates by the US Federal Reserve (Fed) would have a significantly negative impact on the US economy. Rising interest on loans could reverse the recovery of the real-estate market and dampen companies’ investments. If the weakening of industrial activity that was to be observed as of mid-2015 exacerbates, there will be a perceptible impact on the growth of the US economy in 2016. If the recovery of the labor market falters or if wages rise more slowly than currently assumed, there will be negative consequences for private consumption, which is now the main driver of US economic growth. Political uncertainty in advance of the presidential election in 2016 could also impact consumer and investor confidence. Although the Fed could counteract significantly weakening growth through its monetary policy, it would have little scope for action in this field, so the effectiveness of the potential measures would be limited. A possible renewed wave of expansive measures would also further increase the danger of speculative bubbles. Such a development would have significant consequences because the Daimler Group (especially the Mercedes-Benz Cars and Daimler Trucks divisions) generates a considerable volume of its unit sales in the United States and diminished growth could also spread to other regions. However, if investment activity in the United States turns out to be significantly more dynamic than previously assumed, this could result in substantially stronger growth. The resulting increased employment and income effects could boost demand for all the automotive divisions.

If there is no continuation of the required consolidation of state budgets and of reform efforts in the countries of the European Monetary Union (EWU), this could cause renewed turmoil in the financial markets, leading to increasing refinancing costs through rising capital-market interest rates and thus jeopardizing the still only moderate economic recovery. The extremely low rate of inflation harbors an additional risk in that a long-lasting and broad-based fall in prices would constitute a considerable threat to the economic recovery of the EMU and make it even more difficult for the debt-ridden countries of the euro zone to finance their debts. Furthermore, there is concern that the very expansive monetary policy of the European Central Bank could further increase the danger of speculative bubbles in the stock and bond markets. Major turbulence in the financial markets would directly impact the economic outlook. Although the agreement reached between Greece and its creditors in the summer of 2015 reduced the direct risk of Greece’s exit from the euro zone, that risk is by no means completely removed. A return to that discussion could lead to renewed uncertainty and volatility in the financial markets. A new factor is the risk of the United Kingdom’s exit from the European Union. This would have significantly larger economic effects, whereby a major portion of the risk would relate to the UK itself. The possible burden on the British economy would be immense. The European market continues to be very important for Daimler across all divisions; for the Mercedes-Benz Cars and Mercedes-Benz Vans divisions, it is in fact still the biggest sales market. An opportunity that is difficult to assess can be seen in a significantly improved economic development in the euro zone. If countries such as Italy and France implement reform measures more quickly and decisively than has so far been assumed, economic growth could also accelerate. That would benefit the development of investment and demand for motor vehicles in the important European market.

In Japan, the failure of the country’s expansive monetary and fiscal policy and the lack of structural reforms could trigger a significant growth slowdown or recession, although this should be regarded as a regionally limited risk. A slowdown of economic growth could lead to lower demand for cars and trucks, which in turn could negatively affect the Mercedes-Benz Cars and Daimler Trucks divisions, for which Japan is an important sales market. A regionally limited opportunity exists in the possibility of a distinct acceleration of economic growth in Japan. This could be caused by a significant increase in investment activity, resulting from the targeted structural reforms and the expansive monetary and fiscal policies that have already been initiated. The Mercedes-Benz Cars and Daimler Trucks divisions could then benefit from this positive development.

Due to China’s enormous importance as a growth driver for the world economy in recent years, an economic downturn in China would represent a considerable risk to the world economy. The stock-market slumps in the summer of 2015 and at the beginning of 2016, the volatile development of the real-estate sector along with falling exports and increasing capital outflows are indicators of structural weaknesses. If these structural problems become more severe than currently assumed and the growth slowdown turns out to be more pronounced as a consequence, the world economy would cool off significantly. Another factor is the significant risk inherent in the enormous growth in debt that has been observed since the global financial crisis, especially in the corporate sector. If the growth slowdown results in an excessive increase in credit defaults, this could lead to turbulences in the banking sector and the financial markets. China is now a key sales market for the Mercedes-Benz Cars and Mercedes-Benz Vans divisions in particular, which means that any disruptions caused by the aforementioned risks could result in lower-than-planned growth in unit sales. In addition, a drop in demand in China would further exacerbate the fall in the price of oil and other raw materials, with extremely disadvantageous effects for raw-material exporting countries worldwide. This would have a massive negative impact on demand for the automotive divisions in these regions. On the other hand, a further opportunity is seen in an even stronger development of the Chinese economy. This could be triggered by the expansive monetary and fiscal policies taking rapid effect, accompanied by a significant increase in consumption. Strong growth in overall economic consumption would create additional opportunities for the aforementioned divisions.

Another risk is to be seen in a renewed weakening of growth in the emerging markets. There have been disappointing developments in recent years, especially in major economies such as Russia and Brazil, although other countries such as Indonesia and Turkey have also developed below their possibilities. A combination of weak growth and high interest-rates increases the risk of a rising number of defaults in those countries, especially in view of the substantial expansion of credit in some cases over the past few years. A further drop in the price of raw materials along with the interest-rate increase in the United States could lead to renewed substantial capital outflows, especially in raw-material exporting emerging countries. This would worsen financing conditions above all in the emerging markets, which are very dependent on foreign capital due to their high current-account deficits and have high rates of foreign debt. Financial-market turbulences going as far as currency crises would be possible consequences and could have a massive impact on the economies of the affected countries. As Daimler is already very active in these countries or their markets play a strategic role, this would have significantly negative effects on the Group’s prospective unit sales. An opportunity is to be seen in the implementation of reforms occurring in important emerging economies. If structural reforms are quickly and consistently carried out in countries such as India or Indonesia, flows of global capital into these countries would increase again, resulting in new scope for growth. Furthermore, reduced uncertainty in the international financial markets following the first rise in interest rates in the United States could have positive effects, especially on the economies of the emerging markets.

The conflict between Russia and Ukraine has led to an additional risk for the development of the world economy since 2014. This risk has increased macroeconomic uncertainty and has had a negative effect on the business climate and consumer confidence. An escalation of the crisis and the resulting tightening of sanctions and counter-sanctions would have a massive negative impact on the economy, especially in Europe, whereby the exact extent of this effect is very difficult to predict. It is conceivable that such an escalation would negatively impact oil prices through a higher risk premium, and it would also dampen sentiment and demand in markets that are highly dependent on oil imports. Furthermore, the consequences of a possible debt default by Russia or of its failure to service due debts cannot be predicted.

The conflict in Syria, which has heated up as a result of the offensive of the “Islamic State” (IS), is threatening the stability of the region, especially in neighboring Iraq. The severance of diplomatic relations between Iran and Saudi Arabia is increasing the tension in the region and reducing the chance of a settlement of the current conflicts. Although most Iraqi oil production facilities are located in regions not controlled by IS, concerns still remain that Iraqi oil deliveries could be interrupted or that the armed conflict in Syria could spill over into other areas. An abrupt increase in oil prices brought about by an attack on oil refineries could endanger the recovery in fragile European economies or in the United States and could also negatively affect emerging markets that depend on oil imports. However, if oil prices remain at such a low level for a long time, this could present a significant growth opportunity for the world economy due to increased purchasing power. An additional factor is that recent terror attacks by IS have shown that the conflict can no longer be regarded as a regional risk. Should further attacks or assassinations in Europe lead to a shock of uncertainty, investment and consumer confidence could be severely undermined with a resulting impact on the real economy. In addition, state spending for such purposes as coping with the refugee crisis and for security actions could lead to rising fiscal deficits in Europe. However, the suspension of the sanctions imposed on Iran represents an opportunity. The resumption of economic relations and an enormous need to catch up after the end of the sanctions offer great growth potential in which the divisions Mercedes-Benz Cars and above all Daimler Trucks can participate.

On the global financial markets, a market environment with relatively low liquidity could lead to significant market corrections and phases of extreme volatility, for example when market expectations with regard to central bank activities in the United States or Europe are not fulfilled. Such developments could impact the worldwide investment climate and have a negative effect on the global economy. In addition, tensions resulting from exchange-rate volatility and possible manipulations carried out to preserve global competitiveness could lead to an increase in protectionist measures and a type of “devaluation race.” This would put a substantial strain on world trade and threaten future growth.

General market risks and opportunities

The risks and opportunities for the development of automotive markets are strongly affected by the situation of the global economy as described above.

The assessment of market risks and opportunities is associated with assumptions and forecasts about the overall development of markets in the various regions in which the Daimler Group is active. The potential effects of the risks on the development of the Daimler Group’s unit sales are included in risk scenarios. The danger of worsening market developments or changed market conditions, especially due to the partially unstable macroeconomic environment and political or business uncertainties, generally exists for all divisions of the Daimler Group and can cause changes relating to the planned unit sales and inventories. Differences between the divisions exist due to variations in their regional focus of activities. The development of the markets is continuously analyzed and monitored by the divisions; if necessary, specific marketing and sales programs are implemented. Clear strategies have been formulated for each division in order to ensure profitable growth and efficiency progress.

Existing uncertainties with regard to market developments can also mean that the overall market or regional conditions for the automotive industry might develop better than assumed in the internal forecasts and the premises upon which the Group’s target planning is based. Due to strong demand, in particular for vehicles of various series of the Mercedes-Benz Cars division, market opportunities are conceivable that could be utilized by creating additional production capacities or increasing the divisions’ production volumes. The possibility of higher unit sales of vehicles exists in the Daimler Trucks segment as a result of improved market developments or changed conditions in the market. Further market opportunities have been identified by the Mercedes-Benz Vans and Daimler Buses divisions. However, the existing market opportunities of the divisions of the Daimler Group can only be utilized if production and the corresponding regional conditions can be focused accordingly and gaps between demand and supply are recognized and covered in good time. The measures that could be taken by the Daimler Group to utilize potential opportunities include a combination of local sales and marketing activities, central strategic product and capacity planning, and the adjustment of production and cost structures to the changing conditions.

Some dealers and vehicle importers are in a difficult financial situation. As a result, supporting actions may become necessary to ensure the viability of such business partners. The sources of the risks lay in the respective risk environments. Supporting actions would negatively impact the profitability, cash flows and financial position of the automotive segments. For this reason, the financial situations of strategically relevant dealerships and vehicle importers are continually monitored. Risks of this kind exist for dealers and vehicle importers of the Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz Vans divisions.

The Daimler Group’s successful product portfolio is one of the factors behind the advantageous positioning compared to the competitors. A possible increase in competition and price pressure is another area of risk that affects all the automotive segments. Aggressive pricing policies, the introduction of new products by competitors or price pressure related to the aftersales business could make it impossible to achieve the targeted prices. This might result in lower revenue or could mean that the effect of cost-reduction programs is not fully reflected in earnings. The extent of such risks is oriented towards a division’s sales volume. Depending on the volume of regional unit sales, various measures are taken to support weaker markets. They include the use of new sales channels, actions designed to strengthen brand awareness and brand loyalty, and sales and marketing campaigns. These measures can also be applied to safeguard business in the area of aftersales. Daimler also operates various programs to boost sales through the use of financial incentives for customers. Corresponding measures taken to support the segments’ unit sales would adversely affect the projected revenue. Continuous monitoring of competitors is carried out in order to recognize such risks at an early stage. Opportunities can arise in this context if sales-promotion activities already planned do not have to be applied in full.

Further risks and opportunities at Mercedes-Benz Cars and Daimler Trucks relate to the development of the used vehicle markets and thus to the residual values of the vehicles produced. As part of the established residual-value management process, certain assumptions are made at the local and corporate levels regarding the expected level of prices, on which basis the cars returned in the leasing business are valued. If general market developments lead to a negative or positive deviation from the assumptions, there is a risk of lower residual values or an opportunity of higher residual values of used cars. Depending on the region and the current market situation, the measures taken generally include continuous market monitoring as well as, if required, price-setting strategies or sales promotions designed to regulate vehicle inventories. The quality of market forecasts is verified by periodic comparisons of internal and external sources. If necessary, the set residual values are adjusted and refined with regard to methods, processes and systems for determining such values.

As the target achievement of the Daimler Financial Services division is closely connected with the development of business in the automotive divisions, the existing volume risks and opportunities are also reflected in the Daimler Financial Services segment. In this context, Daimler Financial Services contributes towards marketing expenses, especially for advertising campaigns.

The impact of the risks continues to be assessed as “high”. Due to market volatility, the overall market risk increases to more than € 3 billion. The impact of opportunities has risen, due in particular to market opportunities in the Mercedes-Benz Cars segment.

Risks and opportunities relating to the leasing and sales-financing business

In connection with the sale of vehicles, Daimler also offers its customers a wide range of financing possibilities — primarily leasing and financing the Group’s products. The resulting risks for the Daimler Financial Services segment are mainly due to borrowers’ worsening creditworthiness, so that receivables might not be recoverable in whole or in part due to customers’ insolvency (default risk or credit risk). Daimler counteracts credit risks by means of creditworthiness checks on the basis of standardized scoring and rating methods and the collateralization of receivables, as well as state-of-the-art risk management with a firm focus on monitoring both internal and macroeconomic leading indicators. Other risks associated with the leasing and sales-financing business involve the possibility of increased refinancing costs due to changes in interest rates (interest-rate risk). An adjustment of credit conditions for customers in the leasing and sales-financing business due to higher refinancing costs could reduce the new business and contract volume of Daimler Financial Services, also reducing the unit sales of the automotive divisions. Risks and opportunities also arise from a lack of matching maturities with refinancing. The risk of mismatching maturities is minimized by coordinating the refinancing with the periods of financing agreements, from the perspective of interest rates as well as liquidity. Any remaining risks from changes in interest rates are managed by the use of derivative financial instruments. Further information on credit risks and the Group’s risk-minimizing actions is provided in Note 32 of the Notes to the Consolidated Financial Statements. With regard to the leasing business, the automotive divisions also have a residual-value risk resulting from the risks associated with the development of used-vehicle prices. The extent of the risks and opportunities and the probability of occurrence of the risks relating to the leasing and sales-financing business continue to be assessed as low.

Procurement market risks and opportunities

Procurement market risks arise for the automotive divisions in particular from fluctuations in prices of raw materials. There are also risks of capacity bottlenecks caused by supplier delivery failures as well as risks of insufficient utilization of production capacities at suppliers. In general, the possible impact of risks related to the procurement market continues to be assessed as “high”. The risk situation relating to the probability of occurrence decreased slightly compared with the previous year and is now assessed as “low”. As in the previous year, only minor opportunities are anticipated in the raw-material markets.

Raw-material prices primarily remained constant with some falls during 2015 and featured moderate volatility. The weaker euro against the dollar at the beginning of the year had a major impact on all raw materials priced in US dollars. Due to almost completely unchanged macroeconomic conditions, price fluctuations are expected with uncertain and uneven trends in the near future. On the one hand, raw-material markets can be strongly impacted by political crises and uncertainties – combined with possible supply bottlenecks – as well as by volatile demand for specific raw materials; this increases the risk from raw-material prices for the individual automotive segments. On the other hand, the automotive segments’ procurement operations profit from both the significantly lower dynamism of Chinese industry and from the anticipated continuation of slightly below-average growth of the world economy. Vehicle manufacturers are generally limited in their ability to pass on the higher costs of commodities and other materials in the form of higher prices for their products because of strong competitive pressure in the international automotive markets. A drastic increase in raw-material prices would at least temporarily result in a considerable reduction in economic growth.

Supplier risk management aims to identify potential financial difficulties for suppliers at an early stage and to initiate suitable countermeasures. Even though the crisis of recent years is over, the situation of some of the suppliers remains difficult due to tough competitive pressure. This has necessitated individual or joint support actions by vehicle manufacturers to safeguard their production and sales. In the context of supplier risk management, regular reporting dates are set for suppliers for which we have received early warning signals and made corresponding internal assessments. On these dates, the suppliers report key performance indicators to Daimler and decisions are made concerning any required support actions.

In connection with a further decrease in unit sales in major emerging markets, the Daimler Trucks division in particular is faced with the risk that Daimler will require a significantly lower volume of components from suppliers than originally planned. This would result in underutilization of production capacities for the suppliers. If fixed costs were no longer covered, there would be the risk of suppliers demanding compensation payments.

Risks and opportunities related to the legal and political framework

The risks and opportunities from the legal and political framework also have a considerable impact on Daimler’s future business success. Regulations concerning vehicles’ emissions, fuel consumption and safety play a particularly important role. Complying with these varied and often diverging regulations all over the world requires strenuous efforts on the part of the automotive industry. In the future, we expect to spend an even larger proportion of the research and development budget to ensure the fulfillment of these regulations. The probability of risks’ occurrence has not changed compared with the previous year and is assessed as “medium”; the assessment of possible impact remains unchanged at “high”.

Many countries have already implemented stricter regulations to reduce vehicles’ emissions and fuel consumption, or are currently doing so.

The Mercedes-Benz Cars segment faces risks in China in particular, as the Chinese authorities have defined fleet fuel consumption as of 2020 of 5.0 liters per 100 kilometers (approximately 117 g CO2/km) as the industry’s target for new cars. For the year 2025, China has communicated in the context of its “Made in China 2025” strategy an industry target of 4.0 l/100 km (about 94 g CO2/km). If the manufacturer-specific fleet targets are exceeded, there is the danger that vehicles may not be granted type approval or may be barred from the market. In addition, new emission legislation are currently being discussed (China 6 and Beijing 6). A significant tightening of the current legislation is expected.

Regulations concerning the CO2 emissions of new cars are challenging also in the European Union. As of 2020, fleet-average CO2 emissions of 95 g CO2/km are to be achieved across the industry. The new regulation will apply to 100 % of the fleet in 2021 following a one-year transition period. Daimler will suffer penalties if it exceeds the limits resulting from the average fleet vehicle weight ( €95 per g CO2/km and vehicle). In addition, the planned replacement of the NEDC (New European Driving Cycle) with the WLTP (Worldwide Harmonized Light Vehicles Test Procedure) is creating uncertainty, as neither the date for the introduction of the WLTP nor the conditions for converting from WLTP to NEDC figures to check the NEDC fleet target (by foreseeably 2020) or the continuation of fleet targets in WLTP figures (from foreseeably 2021) has been finally set. Based on current information, the changeover to the WLTP will make it more difficult to meet CO2 targets as of 2020.

In Germany, there have been considerations of stimulating the hitherto sluggish sales of electric vehicles with a government program. The concepts for incentives for car buyers include a discussion of financing. This involves the risk that conventional vehicles would suffer a higher burden in the form of a new registration fee for the financing of incentives (also depending on CO2 emissions). This also applies to the taxation of company cars, which could cause fleet customers to switch over to smaller and more fuel-efficient cars.

Legislation in the United States on greenhouse gases and fuel consumption stipulates that new car fleets in the United States may only emit an average of 163 grams of CO2 per mile as of 2025 (approximately 100 grams CO2 per kilometer). These new regulations will require an average annual reduction in CO2 emissions as of 2017 amounting to 5 % for cars and 3.5 % at first for SUVs and pickups (this rather lower rate applies until 2022). This will impact the German premium manufacturers and thus also the Mercedes-Benz Cars division harder than the US manufacturers, for example. As a result of strong demand for large, powerful engines in the United States as well as Canada, financial penalties cannot be ruled out.

Similar legislation exists or is being prepared in many other countries, for example in Japan, South Korea, India, Canada, Switzerland, Mexico, Saudi Arabia, Brazil and Australia.

Daimler gives these targets due consideration in its product planning. The increasingly ambitious targets require significant proportions of plug-in hybrids or cars with other types of electric drive. The market success of these drive systems is greatly influenced by regional market conditions, for example the battery-charging infrastructure and state support. But as market conditions cannot be predicted with certainty, a residual risk exists.

In 2015, the diesel technology that is important in particular for the achievement of the challenging CO2 targets in the EU came under pressure due to air-quality problems in cities (failure to meet NOx limits) and increasingly due to competitors’ irregularities in the fulfilment of emission tests. In this environment, large parts of the Real Driving Emission (RDE) legislation has been or is being introduced. This has led to very ambitious legislation, which will require very complex exhaust-gas aftertreatment as of 2017. It remains to be seen to what extent the negative headlines and the threat of driving bans on diesel vehicles have unsettled customers with resulting shifts in the drive-system portfolio (fewer diesel and more gasoline engines). If such a shift occurs over the long term, additional measures will have to be taken to meet the CO2 fleet limits as of 2020. We draw attention to the fact, that several environmental authorities in Europe and in the USA have made requests for test results. Some requests were answered without any findings whereas other discussions still continue.

Pursuant to EU Directive 2006/40/EC, since January 1, 2011, vehicles only receive type approval if their air-conditioning units are filled with a refrigerant that meets certain criteria with regard to climate friendliness. For vehicles produced on the basis of type approvals granted previously, the directive allows a period of transition until December 31, 2016. Mercedes-Benz vehicles will fully comply with these legal requirements as of January 1, 2017 through the application of CO2 air-conditioning and the refrigerant R1234yf in combination with a specially developed safety device that will be used depending on each vehicle’s configuration. In December 2015, the EU Commission decided to file a lawsuit with the European Court of Justice (ECJ) against the Federal Republic of Germany. The Commission sees a contravention of the type-approval directive by the German authorities. At present, the Group does not assume that this will result in material effects on profitability, cash flows or financial position.

Strict regulations for the reduction of vehicles’ emissions and fuel consumption create potential risks also for the Daimler Trucks division. For example, legislation was passed in Japan in 2006 and in the United States in 2011 for the reduction of greenhouse-gas emissions and fuel consumption by heavy-duty commercial vehicles. In the United States, a draft was proposed in July for fuel-consumption and greenhouse-gas legislation, which will probably have to be complied with starting in the period of 2021 to 2027. As the legislation will not be passed until mid-2016, the consequences for Daimler Trucks cannot yet be fully assessed. In China, legislation has been drafted which is likely to affect exports to that country and require additional expenditure as of 2017. The European Commission is currently working on methods for measuring the CO2 emissions of heavy-duty commercial vehicles that will probably have to be applied as of 2018. We have to assume that the statutory limits will be very difficult to meet in some countries. Very demanding regulations for CO2 emissions are also planned or have been approved for light commercial vehicles. This will present a long-term challenge for Mercedes-Benz Vans in particular, because the division primarily serves the heavy segment of N1 vehicles. The European fleet of N1 vehicles may not emit an average of more than 175 g CO2/km as of 2017 and not more than 147 g CO2/km as of 2020; penalty payments may otherwise be imposed. In the United States, Mercedes-Benz Vans is affected to varying degrees by fuel-consumption and greenhouse-gas regulations for both light-duty and heavy-duty vehicles. The stricter limits planned for the years 2021 to 2027 will also affect Mercedes-Benz Vans.

Daimler currently does not anticipate any additional risks from worldwide statutory safety regulations due to the Group’s longstanding strong focus on vehicle safety.

In addition to emission, fuel consumption and safety regulations, traffic-policy restrictions for the reduction of traffic jams, noise and pollution are becoming increasingly important in cities and urban areas of the European Union and other regions of the world. Drastic measures are increasingly being taken such as general vehicle-registration restrictions like those in Beijing, Guangzhou or Shanghai. This can have a dampening effect on the development of unit sales, especially in growth markets. Pressure to reduce personal transport is also being applied in European cities through increasing measures such as restrictions or bans on vehicles in inner cities, as well as congestion charges and other types of road-use fees. This stimulates demand for mobility services, including car sharing services. In order to utilize the resulting opportunities, Daimler is present in the market with the provision of innovative mobility services (e.g. car2go, moovel, RideScout and mytaxi).

Daimler continually monitors the development of statutory and political conditions and attempts to anticipate foreseeable requirements and long-term targets at an early stage in the process of product development. The biggest challenge in the coming years will be to offer an appropriate range of drive systems and the right product portfolio in each market, while fulfilling customers’ wishes, internal financial targets and statutory requirements. With an optimal product portfolio and market-launch strategy, competitive advantages may also arise.

The position of the Daimler Group in key foreign markets could also be affected by an increase in bilateral trade agreements. If bilateral agreements are concluded without the involvement of the European Union or without the conclusion of equivalent agreements by the EU, the position of the Daimler Group could be significantly impacted. At the same time, however, this could also result in opportunities for the Daimler Group if the EU concludes agreements with markets which have no similar agreements with other important competitive markets.

Furthermore, the danger exists that individual countries will attempt to defend and improve their competitiveness in the world’s markets by resorting to interventionist and protectionist actions. Particularly in China and the markets of developing countries and emerging economies, tendencies are increasingly observed to limit growth in imports, for example by making certification processes more difficult, and to attract direct foreign investment by means of appropriate industrial policies. Furthermore, a tendency towards stricter competition law is also to be observed.

In order to adapt to these requirements, Daimler has already increased its local value added in major markets, and has thus taken appropriate action in good time. On the basis of increasing proximity to the markets of our production locations, however, further opportunities also exist for the Daimler Group such as logistical advantages or opportunities relating to the utilization of market potentials.